Don't crown Big Tech the global comms kings just yet
Now that I've recovered from the AT&T and Microsoft 5G cloud announcement, I'm chewing on the notion that telcos are outsourcing innovation to Big Tech. I don't for a minute intend to imply that Big Tech on the whole doesn't move more quickly than most telcos. Rather, I contend that innovation is a multi-factored entity. Considering innovation in this way may give us a more nuanced take on what on the surface seems to be an abdication of power from the telcos to Big Tech.
Innovating to reduce cost structure is one thing. Leveraging new software architectures, modern infrastructures and radical automation contributes to lower cost structures; the benefits of those innovations become more powerful and visible as you scale networks, processes and systems.
Innovating to get people to spend more money with you is a different thing altogether, and one that I submit is of greater immediate concern to the telcos. Yes, it is possible to innovate on how services are developed, but can it change how people think? Any CIO or CTO will tell you that people are always the most challenging aspect of any transformation. And while it's safe to say there are more scrum masters and big AI brains in Big Tech than in telecom, I doubt whether that gives it an innovation advantage for creating new telco revenue streams.
Given my experience and conversations with telcos over the years, I have a hard time saying they have fewer innovative ideas than Big Tech. What is different are priorities. Incumbent telcos need to keep the lights on, keep existing customers, expand share of wallet, lower costs, and position their businesses and networks for the future. Because of this, I suspect telcos have fewer people devoted to blue-sky thinking. And those that are have to also contend with the cloud of regulation that hangs overhead.
(Quick aside: This gets me thinking about the regulatory implications of telcos' moves to the public cloud. Will AWS and Azure be re-classified as critical infrastructure once it starts carrying live network traffic? I'd love to see someone more well-versed in this subject tackle this... The metaphor comparing telco transformation to changing plane engines in flight may be overused, but it remains apt.)
What Big Tech has done extremely well is innovate in a third area, that of business models – disrupting numerous industries and changing the relationship we have with our technology. Could telco use some innovation on this front? Absolutely. Do I expect someone from Microsoft to come up with a revolutionary model for 5G that AT&T hasn't considered? No. Always happy to be proven wrong, of course. While his comments are, of course, self-serving, I believe Rakuten's CTO when he says AWS and others "lacked the expertise in handling the 'uniqueness in the radio domain that has never existed in a typical IT workload.'"
Check out Rakuten CTO Tareq Amin's keynote from the Open RAN World Digital Conference in April 2021.
This may not be a huge issue in the near term, as 5G networks will be cloud-friendly from the outset (I intentionally didn't say "cloud native," because even 5G will have a mix of VM and container-based workloads). However, if and when 4G and other legacy traffic gets moved to the public cloud, these architectural differences will surface. A lower cost structure will do no good if the services can't be reliably, securely, consistently and efficiently delivered.
The Holy Grail is the data (as it's always been). I see frothy talk about how AI/ML will let telcos harness this data. I heard the same story years ago from vendors pitching data analytics software. Perhaps it will be different now that the telcos can take a peek behind the hyperscalers' curtains and see how they've done it. I wonder about the legacy technology, though. How easy will it be for modern tools to access/interpret info in databases designed decades ago? It's been hard enough to modernize legacy OSS and BSS. Now you want to introduce another element into what's already a complex stew? Not that it can't be done – given enough time and money, anything is possible – but the fervor with which some are proclaiming Big Tech will come to the rescue of telco gives me pause.
Does all of my equivocation and defensiveness make me a telco apologist? Perhaps it's unavoidable after so many years of being so closely engaged with so many people working so hard to make things better. I'm not angsty about telcos outsourcing (some of) their operations to the public cloud, either. There's a lot more to being a service provider than the infrastructure traffic runs on. Maybe I have on rose-tinted glasses, but I do remain optimistic that Big Telco and Big Tech can and will find a way to harness what each one does best and do so in a way that lets both groups prosper.
— Roz Roseboro is a former Heavy Reading analyst who covered the telecom market for nearly 20 years. She's currently a Graduate Teaching Assistant at Northern Michigan University.